capitalism

an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, especially as contrasted to cooperatively or state-owned means of wealth.

It is easy to forget that capitalism was coined not so long ago, in the mid-19th century, when the Industrial Revolution was in full swing, and individual entrepreneurs were creating new industries and amassing wealth. Terms for the other two major competing economic systems of the past two centuries—socialism and communism—were also coined around the same time. Also, about the same time it became common to designate all such coinages as “isms”: terms formed by adding the suffix -ism to a root word in order to expand its meaning to encompass a related system, theory, or practice. Thus from a fairly old word, capital, the relatively newer word, capitalism, was formed to describe the then emerging economies of the West. (Another towering ism coined later in the 19th century was, of course, Darwinism. ) On the surface, the meaning of capitalism seems straightforward, referring to an economic system in which private individuals, rather than governments, own property and businesses. But beneath the surface, strong currents of opinion and theory swirl about the term. Many people fiercely espouse capitalism as an economic freedom inseparable from democracy, as reflected in several books considered classics and still avidly read today: for example, Capitalism and Freedom by Nobel laureate Milton Friedman (first published in 1962), and Capitalism, Socialism and Democracy by Joseph A. Schumpeter (first published in 1943). So it may be a challenge to use the term without triggering a discussion of its broader political context.

Popular references

—The Intelligent Woman's Guide to Socialism and Capitalism: A treatise on economics and political science by Irish playwright George Bernard Shaw, first published in 1928.

—The Intelligent Homosexual's Guide to Capitalism and Socialism with a Key to the Scriptures: 2009 play by Tony Kushner. The play's title was inspired by Shaw's book and Mary Baker Eddy's Science and Health with Key to the Scriptures.

—Capitalism: A Love Story: 2009 documentary film written and directed by, and starring, Michael Moore.

—Monopoly, the classic capitalism board game, from Hasbro. (“The success of Monopoly mirrors the success of capitalism,” noted Philip E. Orbanes, in his 2006 book, Monopoly: The World's Most Famous Game.)

Related Quotations

“History suggests only that capitalism is a necessary condition for political freedom. Clearly it is not a sufficient condition.“ —Milton Friedman, Capitalism and Freedom(1962)

“[F]rom the beginning, capitalism has been characterized by a tension between laissez-faire and intervention—laissez-faire representing the expression of its economic drive, intervention its democratic political orientation.“ —Robert Heilbroner and Lester Thurow, Economics Explained(1982)

“[C]apitalism works better than it sounds, while socialism sounds better than it works.“ —Richard M. Nixon, Beyond Peace(1994)

capitalism

/ˈkæpɪtəˌlɪzəm/

noun

1.

Also called free enterprise, private enterprise. an economic system based on the private ownership of the means of production, distribution, and exchange, characterized by the freedom of capitalists to operate or manage their property for profit in competitive conditions Compare socialism (sense 1)